Carryforward of disallowed Section 179 Depreciation Amount from 2020 to 2021, and then from 2021 to 2022

[renaldorey]

@PatriciaV 

@AliciaP1 

Any fix coming or workaround for this?  Turbotax will not let me proceed with e-filing due to this issue.

But I could not find any way to modify this to get the section 179 carryover to work and show up in the depreciation total for this year.

This arose from a a section 179 deduction on a residential rental property from 2021 that was partially disallowed due to the property being purchased mid year, and therefor only the prorated amount of the full deduction was allowed in 2021.  So there was carryover for 2022, but TT thinks this is an error "Sec 179 Carryforward-Reg should not be entered, because this rental property is not a commercial property", even though TT autopopulated (I believe correctly) the "Section 179 carryover" field in the 2022 "Carryovers to 2022 Smart Worksheet"

Clearly this can't be true if the deduction was allowed int he first place.  Obviously I'm not going to just zero out the carrryover to remove the error.  I tried shifting it to the passive loss carryover entry, but that causes the net taxes for 2022 to come out differently, and the carryover is not added to the depreciation total for that property.

It seems like a bug to me.  The final forms seems to come out correctly as long as I leave the entry as-is, so I wouldn't care, except it is preventing me from e-filing.  Every time I hit "Transmit Returns Now" it just loops me back to the review screen asking me to fix the errors.

[PatriciaV]

The Section 179 deduction for property used for rental properties has been retroactively disallowed, as shown on the Section 179 Carryover screen in TurboTax.

See IRS Pub 946 Section 179 Eligible Property, chapter 2 for information on the section 179 deduction. "Property you acquire only for the production of income, such as investment property, rental property (if renting property is not your trade or business [ie: passive income]), and property that produces royalties, does not qualify."

You have the option to amend return that created the Sec 179 carryover and take bonus/regular depreciation instead.

@renaldorey

[renaldorey]

@PatriciaV 

hmmm, but TT is allowing me to take sec 179 deductions for current year on my other residential rental properties (5yr property from cost-seg study, i.e. furnishings and equipment).  It adds them to the total schedule E depreciation number, no errors.  The only error is with the carryover amount from 2021.

I would think if you were not allowed section 179 deduction for anything related to residential rental, then it would not allow it in the current year either?  But it seems to be fine with that.

[Richlubbers]

Thanks, it worked for me.

[charjean47]

I have the same problem.

[MichelleLO]

Please click here to see the post from AliciaP1 within this thread requesting a token number from you.

@charjean47